State Farm Reaches Settlement Over Salvage Cars

Car Owners To Be Compensated



POSTED: 9:02 pm EDT October 21, 2005

UPDATED: 9:07 pm EDT October 21, 2005



COLUMBUS, Ohio -- Tens of thousands of car owners across the nation will be entitled to their share of a $40 million settlement after possibly paying for cars that were not as good as advertised, NBC 4 reported.



State Farm Mutual Automobile Insurance Company has identified 500 totaled vehicles in Ohio that it said were never properly retitled. Now, the owners will be getting hundreds of dollars back for the market loss of their vehicles.



State Farm reached a settlement with the attorneys general of nearly all 50 states.



In a statement, State Farm said the agreement was "the right thing to do for our policyholders and the public."



"We identified them and we're in the process of notifying consumers and giving them some compensation for the fact that their cars are now going to be diminished in value," Ohio Deputy Attorney General Shaun Petersen said.



For the past eight years, the Ohio Attorney General's Office said State Farm never issued a "salvage" title for vehicles designated a "total loss," meaning that they had been wrecked, flooded or stolen, NBC 4 reported.



"Under Ohio law, they're not allowed to drive vehicles that should be branded as salvaged," Petersen said. "Not only are we concerned about safety, but an innocent purchaser is going to have no idea that they were purchasing vehicles that had been in a serious accident."



In many cases, the vehicles were resold as "used" instead of "damaged." Now, Ohio's Bureau of Motor Vehicles has blocked any transactions involving those vehicles until they can be retitled.



Compensation of up to $20,000 is available if eligible consumers return their claim forms by Nov. 18. After that, they should expect their checks soon.



"Hopefully, within time for the holidays. We're pushing them to get that turned around as quickly as possible," Petersen said.



The state said reselling the salvaged vehicles is now illegal, but they can be retitled as a "rebuilt salvage," which upon inspection will allow them back on the road.



Watch NBC 4 and refresh nbc4i.com for additional information.